Fast Fact: Depreciation encourages investment in real estate, but that could change if Congress extends the depreciation time periods.

The current rules of depreciation in the U.S. Tax Code are out of date in today’s fast-paced world.

Those rules say you must depreciate residential investment property over a period of 27.5 years or 38 years for commercial property.

That’s just too long in today’s world where advances in technology and construction quickly make something that was state of the art a few years ago practically worthless today.

Depreciation times need to be shortened. 18 and 30 years are more realistic in today’s world. But, incredibly, some members of Congress want to extend them instead.

Depreciation not only encourages investment in real estate, but it also encourages making capital improvements — improvements to keep rental homes, apartments, shopping centers, office buildings, and other properties we use up-to-date, safe, and modern.